Latvia Economic Sectors
Compared to the pre-war period, the Latvian economy has changed considerably. As part of Russia it was an important transit area and the export of many agricultural and forestry products allowed ships to be loaded with raw materials, on their return, at low rates, so that some coastal locations, especially Riga, they had also been able to develop industrially, working for the Russian market. Having become independent, Latvia has had to rely only on its own resources and has found a vital reserve of energy in working in the fields. However, since the ownership of these was partly in the hands of the Baltic barons (of German origin), a vast agrarian reform was prepared, which had both national and social purposes, dissuading the Latvian peasant from communist ideas.
In 1918 about half of the land (3 million ha.) Was in the hands of 1300 people, who had an average ownership of 1000-1500 ha.; the peasants owned 39% of the territory, the state 11%, the church 2%. The law, which came into force on September 16, 1920, established that properties over 50 ha. (with a maximum limit of 100 for those who cultivate themselves), they had to be transferred to the state fund, created specifically to distribute the land to those without it. The maximum extension of the new properties was set at 22 ha. The fund will confiscate about 3 million and 700 thousand ha. (81% sold by large owners, 17% from Crown lands, 2% from ecclesiastical bodies): half was preserved by the state (forests, swamps, waters), the rest was distributed to the peasants. There are now about 200,000 properties, of which 60,000 are completely new, with an average area of 14.8 ha., which is sufficient for the maintenance of an agricultural family. The possible damages of an excessive splitting and a limited availability of capital have been, at least in part, mitigated by appealing to the spirit of cooperation.
The extension of arable land is on the whole, in relation to the latitude, quite high, as it covers 31.5% of the territory. For this reason, Latvia is also in an intermediate position between Lithuania, where conditions are better (49.2%) and Estonia where the smaller quantities of arable land (21.7%) reflect its more northerly situation. The area covered by woods is higher than in neighboring states (26.8%), while for meadows (14.4%) and pastures (13.4%) it is surpassed by Estonia, but slightly exceeds the Lithuania. Barren land covers about one seventh of the total area. Better conditions for agriculture are found in Semigallia (especially in the area between Daugavpils and Jaunlatgale and between Daugapvils and Ludza) and in Letgallia (especially in N. and W of Jelgava).
Before the war cereals were very cheap in Russia and therefore it was not very convenient to intensify the cultivation in this northernmost area, subject to considerable climatic variations. The large owners therefore preferred farming, or cultivated rye and barley extensively. The new state, while aiming to preserve the production of cereals within the pre-war limits, giving preference to wheat rather than rye, has placed greater importance in animal products, enhancing the production of butter. For this reason, the extension of land cultivated with oats, which occupies just under a third of the arable land, has been kept high. The average yield per hectare, however, is still very low and almost the same as before the war. The fluctuations from one year to the next are very significant: it will suffice to remember that in 1930 rye gave an average yield of 13.7 q. per hectare and only 6, 1 in 1931 and that the potato gave 130.8 quintals in 1929 against 40, 1 in 1928. A product that once had, especially in the early post-war years, great importance as an export item, but which is now in decline due to the decline in prices on the world market, is flax, which is a state monopoly. The breeding, which is much less affected by climatic variations and can find better opportunities for sale, has been able to develop quite well, and now exceeds the pre-war number of animals in quantity.
The woods cover 26.8% of the territory, with an area (16,592 sq km) slightly less than the pre-war period. The state owns the four fifths, private and community after all, the first in the form of large extensions, the others of small plots, generally not very profitable. 78% is made up of conifers, 22% of broad-leaved trees. Extensions exceeding 45% of the territory are found in the region of Ventspils and Kuldīga, to the East. of the mouth of the Daugava, in the plains of Lubāna and around Valka. The state supplies the residents with wood, within the limits of need, at a reduced price, both for building houses and for heating. In the last decade, the state has had at its disposal an average of 3 million cubic meters each year. of wood for construction, 1.7 million cubic meters. of firewood, and 140 thousand cubic meters. of branches and small wood; some of the best wood was exported.
As for mineral wealth, Latvia is poorly provided. It is worth mentioning only the permic limestone used to make cement, some gypsum deposits, the clays used for bricks and tiles, the dolomitic limestones used for construction, some sulfur springs (in Barbele, Baldone, Kemeri). Amber, once quite abundant, is now rarely found near Liepāja. There are countless peat deposits, which are little used for now.
The industry reached in 1914 a very significant development, in part to the favorable natural conditions (coastal zone of a great state agriculture), partly because of the advantages conferred with awards and rates (of Count Witte policy), nor forget the he influence had the proximity of the capital (Petersburg) and the activity of many German entrepreneurs. The war partially destroyed the factories, the machines were transported to Russia, the workers emigrated and Riga, the largest industrial center in the country, where four-fifths of the companies were concentrated, decreased from 515,000 residents in 1914, to 210 thousand in 1917-18. Then the industry has risen again, but without having the importance of the past, having had to adapt to the needs of the internal market.
The machinery and metal industries (especially wagons, agricultural machinery), which had by far the pre-eminence before the war, are much less important, as are the textile and chemical industries (rubber). In the first place is now the industry that processes food products (especially butter) and wood processing is slightly progressing. About 41,000 people are employed in companies with more than 50 employees, 9,200 in companies with 20-49 employees, the rest in smaller companies. Two thirds of the companies are now concentrated in Riga; the largest are the wagon factories (Phoenix) and rubber factories (Provodnik); in Jelgava there is an important linen mill and a sugar refinery, in Liepāja metallurgical workshops (Becker), in Ventspils some sawmills.
The foreign exchanges do not present a budget in favor of Latvia, being the costantemene exports less imports. This depends both on the precarious conditions of agriculture and the still insufficient export of animal products, and on the rather large demand for foreign products, which is related to a somewhat higher standard of living than in Lithuania (in turn connected with the greater number of urban centers). The overall movement of exchanges, which until 1929 had been constantly increasing, then begins to decline both in terms of volume and prices, returning to the figures of 1922-23.
About three-fifths of exports (1926-30) consisted of three products: timber (29.7 of the value), butter (20.7) and flax (9.6), the latter now decreasing, while the export of butter, which rose in 1931 to 18,740 tons. The import, which includes a very large number of goods, half of the value consists of manufactured products, especially textiles, yarns, machines, fertilizers, chemicals, gasoline, electrical equipment. Among the countries that buy goods in Latvia, Germany is in first place (1921-27% of the value), then Great Britain (24.4), the USSR (20.2), then Belgium (7.5) and France (4.7). Among the countries that sell goods to Latvia, Germany also ranks first (37.1%), followed by Russia (9.3), Poland (9.2), Great Britain (8.5).